More than one-third of financial services firms recently surveyed by Deloitte say they are concerned about the data quality and management capabilities of their risk management systems.
Deloitte spoke to 86 chief risk officers at various financial services organisations for its eighth biennial Global Risk Management survey and found 40 per cent of respondents expressed their concerns around these issues.
Only a small group of financial services organisations (less than 25 per cent) are completely happy with their risk management systems, indicating that they were 'extremely' or 'very effective'.
According to the survey, 70 per cent of respondents consider their risk management systems to be extremely or very effective at managing credit risk, with 68 per cent saying their systems are more than capable of managing market and liquidity risk.
However, 'cross asset class' risk calculations ranked poorly in effectiveness as only 19 per cent claim their systems are more than capable in doing this. Enterprise-wide stress testing based on economic scenarios also ranked poorly in effectiveness (23 per cent).
When it comes to risk data strategy and infrastructure, only 18 per cent of financial services organisations globally consider their systems to be more than effective in managing their data marts/warehouses, with less than 25 per cent claiming they are fully satisfied with how their systems help with data maintenance, standards and processes.
“Eighty per cent of financial services’ boards are now actively approving and providing direction on risk policy and risk appetite,” said Peter Matruglio, Deloitte Financial Services Risk leader.
“They are demanding more information and clarity on the risks associated with executive decision making, operational processes, and reporting," he said.
“Australian organisations are looking to update their risk systems, not just from a standalone perspective, but more importantly to integrate them with their finance and other management systems. As Australian institutions upgrade their core systems, the time is opportune to consider integrating risk modules and systems into the new operating platforms.”